Be Well: Adding Obamacare to the employee insurance formula

Insurance costs on the rise

For years, health care costs have risen faster than inflation.

This year, Towers Watson put out a release celebrating that insurance costs nationwide increased of 4.4 percent.

In a reported titled the "U.S. Employers Experiencing Smallest Increases in Health Care Costs in 15 Years," the benefits consulting firm Towers Watson celebrates an increase of only 4.4 percent.

Employers typically pay a portion of an employee's overall costs and the employee pays the other portion. In the past, that formula has been 80/20 with employers paying 80 percent of a worker's annual premium and the employee paying the other 20 percent out of their paychecks. But - as costs climb- many employers are asking workers to pay a larger share.

"Ignoring health care reform for a second - which is always difficult to do in today's environment, but ignoring healthcare reform for a second, employers have always been wrestling with the (idea) of, 'How can I maximize the benefits that I provide to my employees?' Making sure they are competitive, and I can attract and retain talent," says Jason Masony at the Cleveland offices of Towers Watson. "At the same, we are under cost pressures and we have to minimize the costs. So there has always been this how do I effectively do that?"

The average costs of premiums depends on the individual employer and how rich the benefits are. For the mid and large-sized employers that Towers Watson surveyed, the total per-employee costs averaged about $12,700 annually.

Adding in Obamacare

Masony says the taxes and fees implemented by federal health reform will be added to those premiums.

"Things like the health insurers tax, the transitional reinsurance fee, those items are now kind of adding pressure, they are giving employers a reason to say, OK, now we really have to think about building a high-performing health plan because we really have to focus on minimizing our costs, minimizing the increases health care reform has on us," he says.

Employees can expect premiums to keep rising in the short term as are co-payments for drugs and doctor visits.

But, in the long term, many of the policy experts believe the Affordable Care Act will provide some price relief. There are plenty of aspects of the law aimed at changing the way health care is paid for and are expected to actually slow the rate of growth in costs.

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